Barack Obama on Budget & Economy

Junior Senator (IL); President-Elect

Make government fiscally responsible & live within budget

Q: This year’s deficit will reach $455 billion. Won’t some programs you are proposing have to be eliminated?

OBAMA: Every dollar I’ve proposed, I’ve proposed an additional cut hat it matches. To give an example, we spend
$15 billion a year on subsidies to insurance companies. It doesn’t help seniors get better. It’s a giveaway. I want to go through the federal budget line by line, programs that don’t work, we cut. Programs we need, we should make them work better.
Once we get through this economic crisis, we’re going to have to embrace a culture of responsibility, all of us, corporations, the federal government, & individuals who may be living beyond their means.

McCAIN: I’d have an across-the-board spending
freeze. I know how to save billions of dollars in defense spending. One would be the marketing assistance program. Another one would be subsidies for ethanol. I would fight for a line-item veto, and I would certainly veto every earmark pork-barrel bill.

When Bush came in, we had a surplus; now we have a deficit

Q: How can we trust either of you with our money when both parties got us into this global economic crisis?

OBAMA: I understand your frustration and your cynicism. Most of the people here, you’ve got a family budget. If less money is coming in, you end
up making cuts. Maybe you don’t go out to dinner as much. Maybe you put off buying a new car. That’s not what happens in Washington. And you’re right. There is a lot of blame to go around.

But I think it’s important just to remember a little bit of
history. When George Bush came into office, we had surpluses. And now we have half-a-trillion-dollar deficit annually. When George Bush came into office, our national debt was around $5 trillion. It’s now over $10 trillion. We’ve almost
doubled it.

And so while it’s true that nobody’s completely innocent here, we have had over the last 8 years the biggest increases in deficit spending and national debt in our history. And Sen. McCain voted for 4 out of 5 of those George Bush budgets.

Middle class needs a rescue package with tax cuts

Q: What’s your plan to save people from financial ruin?

OBAMA: This is a verdict on the failed policies of the last eight years that said that we should strip away consumer protections, let the market run wild, and prosperity would rain down.
Step one was a rescue package that means making sure taxpayers get their money back. The middle-class need a rescue package. That means tax cuts for the middle-class. It means help for homeowners. It means we are helping state governments set up projects
that keep people in their jobs. We’ve got to fix our health care system, we’ve got to fix our energy system. You’ve got to have somebody in Washington who is thinking about the middle class and not just those who can afford to hire lobbyists.

McCAIN: I have a plan to fix this problem and it has to do with energy independence. We’ve got to stop sending $700 billion a year to countries that don’t like us. We have to keep Americans’ taxes low. All Americans’ taxes low.

Bailout will unfreeze credit & allow businesses to function

Q: Which parts of the $700B bailout will help people?

OBAMA: Let me tell you what’s in the rescue package for you. Right now, the credit markets are frozen up and what that means is that small businesses can’t get loans. If they can’t get a loan, that
means that they can’t make payroll. If they can’t make payroll, then they may end up having to shut their doors and lay people off. And if you imagine just one company trying to deal with that, now imagine a million companies all across the country.
So it could end up having an adverse effect on everybody, and that’s why we had to take action. But we shouldn’t have been there in the first place.

McCAIN: This rescue package means we will stabilize markets, we will shore up these institutions.
But it’s not enough. That’s why we’re going to have to go out into the housing market and buy up these bad loans and we’re going to have to stabilize home values, and that way, Americans can realize the American dream and stay in their home.

Every citizen should save energy & resources

Q: What economic sacrifices will Americans have to make?

OBAMA: Each and every one of us can start thinking about how can we save energy. And one of the things
I want to do is make sure we’re providing incentives so that you can buy a fuel efficient car that’s made right here in the U.S., not in Japan or
South Korea, making sure that you are able to weatherize your home or make your business more fuel efficient.

McCAIN:
Some of those programs may not grow as much as we would like for them to, but we can establish priorities with full consultation, not done behind closed doors & shoving earmarks in the middle of the night that we don’t even know about until months later.

FactCheck: National debt up from $6T to $10T under Bush

Obama said, “When George Bush came into office, our national debt was around $5 trillion. It’s now over $10 trillion.” Actually, it was closer to $6 trillion when Bush took office.
On Jan. 22, 2001 (two days after Bush was sworn in) the debt stood at $5.728 trillion. On Sept. 30, 2008, it was $10.025 trillion.

Source: FactCheck.org on 2008 second presidential debate
Oct 7, 2008

Bottom-up economics instead of trickle-down economics

Obama explained that a healthy economy is a bottom-up economy, not a top-down economy dependent on trickle-down economics. In a bottom-up economy, the rules of business and government are fair and apply to all. There is a level playing field.
In such an environment, people's enthusiasm and motivations are maximized. They feel that their personal success will be determined by their hard work and effort, not by who they know or who they are related to.
Obama believes that they key to a growing and prosperous economy is a motivated workforce that is engaged and constantly thinking about how it can improve itself, its company's products and services, and its country.

Obama believes that all will
benefit from the system he envisions, that Wall Street & Main Street are intertwined, that you can't have successful securities investing without successful companies to invest in, and you can't have successful companies without motivated engaged workers

Focus on economic justice instead of macroeconomic policy

"The true genius of America, a faith--a faith in simple dreams, an insistence on small miracles; that we can tuck in our children at night and know that they are fed and clothed and safe from harm; that we can say what we think, write what we think,
without hearing a sudden knock on the door; that we can have an idea and start our own business without paying a bribe; that we can participate in the political process without fear of retribution, and that our votes will be counted--at least most of the
time."

These words are from Barack Obama's major economic policy speech on Feb. 13, 2008. It had a completely different focus than the macroeconomic issues we are used to hearing discussed in Washington. Rather, he focused his remarks on what, for him,
is the most pressing need today in America, the need for economic justice. To a great degree, much of Barack Obama's platform for America is about a singular issue, economic justice.

We need both bottom-up politics and bottom-up economics

The power of bottom-up economics, according to Obama, is that it is an economically just system that encourages everyone to work hard, to educate themselves, and to be their most productive because it fairly rewards those who do so.

All are equally motivated to excel, because they know the system will treat them fairly and reward their hard work and effort.

Obama wrote, "It taught me that ordinary people can do extraordinary things when given the chance. Change does not happen from the top down, but from the bottom-up, because the
American people stand ready for change. Just like we need bottom-up politics, we need bottom-up economics. We need to think about working people."

OpEd: "Hope" translates into economic opportunity

"I'm not talking about blind optimism here--the almost willing ignorance that thinks unemployment will go away if we just don't think about it, or the health care crisis will solve itself if we just ignore it. That's not what I'm talking about.
I'm talking about something more substantial, It's the hope of slaves sitting around a fire singing freedom songs; the hope of immigrants setting out for distant shores; the hope of a skinny kid with a funny name who believes that America has a place for
him, too. Hope--Hope in the face of difficulty. Hope in the face of uncertainty. The audacity of hope."

Many of us remember these striking words as the keynote speaker at the 2004 Democratic Nominating Convention. If there is one word associated with
Barack Obama, from all of his campaigns, speeches and books, it would have to be hope. From an economic perspective, the word hope easily translates into economic opportunity. Without economic opportunity, there is no hope.

Clinton left behind a surplus; Bush squandered it

We could have done something to end our addiction to oil, but instead we continued down a path that that funds both sides of the war on terror, endangers our planet, and has left Americans struggling with $4 a gallon gasoline. We could have invested in
innovation and rebuilt our crumbling roads and bridges, but instead we’ve spent hundreds of billions of dollars fighting a war in Iraq that should’ve never been authorized and never been waged.

Worse yet, the price-tag for these failures is being passe
to our children. The Clinton Administration left behind a surplus, but this Administration squandered it. We face budget deficits in the hundreds of billions and our nearly ten trillion dollars in debt. We’ve borrowed billions from countries like China
to finance needless tax cuts for the wealthiest Americans and an unnecessary war, and yet Sen. McCain is explicitly running to continue and expand these policies, without a realistic plan to pay for it. I want to take us in a new and better direction.

A different economic approach vs. McCain’s 4 more years

Q: The GOP is arguing already that you want to increase capital gains taxes on investments and stocks: A lot of middle-class people have those kinds of accounts.

A: If they have a 401(k), then they are going to see those taxes deferred, and they’re
going to pay ordinary income when they finally cash out. So, that’s a phony argument. You know, as I travel around the country, what I’m absolutely convinced of is that people recognize that if only 1% of the population is doing well, when we’ve got wage
and incomes for the average worker actually going down during a period of economic expansion, much less economic recession, that something’s being mismanaged. And they want a different approach. And that’s what we’re going to be offering them.
John McCain is essentially offering four more years of the same policies that got us into this rut that we’re in now.

Can’t do anything at home with $12 billion a month on Iraq

The fact that we’re spending $12 billion every month in Iraq means that we can’t engage in the kind of infrastructure improvements that are going to make us more competitive, we can’t deliver on the kinds of health care reforms that Clinton and
I are looking for. McCain is willing to have these troops over there for 100 years. The notion that we would sustain that kind of effort and neglect not only making us more secure here at home, more competitive here at home, allow our economy to sink.

Source: 2008 Democratic debate at University of Texas in Austin
Feb 21, 2008

Protect consumers with Credit Card Bill of Rights

Create a Credit Card Rating System to Improve Disclosure:Provide consumers an easily identifiable 1-star to 5-star ranking of credit cards, based on the card’s features. Credit card companies will be required to display the rating on all
application and contract materials.

Establish a Credit Card Bill of Rights to Protect Consumers:Obama will create a Credit Card Bill of Rights to protect consumers. The Obama plan will:

Ban Unilateral Changes

Apply Interest Rate
Increases Only to Future Debt

Prohibit Interest on Fees

Prohibit “Universal Defaults”

Require Prompt and Fair Crediting of Cardholder Payments

Cap Outlandish Interest Rates on Payday Loans and Improve Disclosure:Obama supports
extending a 36% interest cap to all Americans. Obama will require lenders to provide clear and simplified information about loan fees, payments and penalties, and he’ll require them to provide this information during the application process.

Bush stimulus plan leaves out seniors & unemployed

We heard the President say he has a stimulus plan to boost our economy, but we know his plan leaves out seniors and fails to expand unemployment insurance, and we know it was George Bush’s Washington that let the banks and financial institutions
run amok, and take our economy down this dangerous road. What we need to do now is put more money in the pockets of workers and seniors, and expand unemployment insurance for more people and more time. And I have a plan that to do just that.

Source: Response to 2008 State of the Union address
Jan 28, 2008

Account for every single dollar for new proposed programs

Q: You have some $50 billion worth of new programs that you cannot account for.

A: We account for every single dollar that we propose. This is one of the things that’s happened during the course of this campaign, that there’s a set of assertions made b
Clinton and her husband, that are not factually accurate. Part of what the people are looking for right now is somebody who’s going to solve problems and not resort to the same typical politics that we’ve seen in Washington. That is something that
I hear all across the country. So when Clinton says I wasn’t opposed to the war from the start or says it’s a fairytale that I opposed the war, that is simply not true. Clinton asserts that I said that the Republicans had better economic policies since
1980. That is not the case. The viewers are concerned about is who’s actually going to help the get health care, how are they going to get their kids going to college, and that’s the kind of campaign I’ve tried to run.

Bankruptcy bill pushed by banks & financial institutions

OBAMA: When we talked a while back, we talked about the bankruptcy bill, which had been pushed by the banks and the financial institutions, that said, basically, it will be harder for folks who have been lured into these teaser rates and then see their
credit cards go up to 30%, that they would have a tougher time getting out of bankruptcy. In the last debate, Clinton said she voted for it but hoped that it wouldn’t pass. Now, I don’t understand that approach to legislation.

CLINTON: I regretted
voting for the bankruptcy bill and I was happy that it didn’t get into law. By 2005, there was another run at a bankruptcy reform, motivated by the credit card companies and the other big lenders. I opposed that bill. There was a particular amendment
that is very telling. It was an amendment to prohibit credit card companies from charging more than 30% interest. It was one of the biggest lobbyist victories on that very bad bill that the bankruptcy bill represented.

Lack of an energy policy is a financial burden

Part of the reason that Kuwait and others are able to come in and purchase, or at least bail out, some of our financial institutions is because we don’t have an energy policy. We are sending close to a billion dollars a day. A realistic plan is
going to reduce our dependence on foreign oil, and to invest in solar & wind & biodiesel. That would make a substantial difference in our balance of payments, and that would make a substantial difference in terms of their capacity to purchase our assets.

Source: 2008 Democratic debate in Las Vegas
Jan 15, 2008

Release people in bankruptcy due to health care problems

We have to release people who are in bankruptcy as a consequence of health care. We’ve got to give them a break.

Source: 2008 Democratic debate in Las Vegas
Jan 15, 2008

Bush & GOP dug budget hole; need years to dig out

Q: Would it be a priority of your administration to balance the federal budget every year?

A: Over the last seven years, what we’ve seen is an economy that’s out of balance because of the policies of George Bush and the Republicans in Congress.
Not only do we have fiscal problems, but we’ve got growing inequality. People are working harder for less and they’re seeing costs go up. So what I want to do is get the long-term fundamentals right. That means that we are investing in education
& infrastructure, structuring fair trade deals, and also ending the war in Iraq. That is money that can be applied at home for critical issues.

Q: So a priority to balance the federal budget, or not?

A: We are not going to be able to dig ourselves out
of that hole in 1 or 2 years. But if we can get on a path of sustained growth, end the war in Iraq, end some of the special interest loopholes and earmarks that have been clogging up the system, then I think we can return to a path of a balanced budget.

Save $150 billion in tax cuts for people who don’t need them

Every proposal I’ve put forward during this campaign we have paid for, and we have specified where that money is going to come from. Let’s just look at our tax code because it’s a great example of how we could provide relief to ordinary citizens who are
struggling to get by. Right now we’ve got a whole host of corporate loopholes and tax havens. There’s a building in the Cayman Islands that houses supposedly 12,000 US-based corporations. That’s either the biggest building in the world or the biggest tax
scam in the world, and we know which one it is. If we close some of those loopholes, we’ve put forward tax relief plans, that will not only restore fairness to our tax code, but it also puts money into the pockets of hard-working Americans who need it
right now, who will spend it, and will actually improve our economic growth over time, particularly at a time when we’re seeing a credit crunch. But it requires leadership from the white house that restores that sense that we’re all in this together.

Take China “to the mat” about currency manipulation

Q: You had said that if China is actually manipulating their currency, the US needs to “take them to the mat.” What exactly did you mean by that?

A: We have legislation that says that if, in fact, they are manipulating their currency--and
I think there’s no dispute that they are--that we need to take strong action. It’s in the Banking Committee. I will say that it’s actually a blunt tool. I’d prefer not doing this legislatively.
The problem is we’ve had a president that has shown no leadership on it. So when I am in the White House, I will meet directly with the Chinese leadership and indicate we have to restore balance.
And, by the way, we have to mobilize our allies, such as the European Union, to have that conversation with us. This is an imbalance that is not good for any economy over time. It’s not sustainable, the trade imbalances that we have.

Rejects free market vision of government

In a 2005 commencement address, Obama described the conservative philosophy of government as “to give everyone one big refund on their government, divvy it up by individual portions, in the form of tax breaks, hand it out, and encourage everyone to
use their share to go buy their own health care, their own retirement plan, their own child care, their own education, and so on. In Washington, they call this the Ownership Society. But in our past there has been another term for it,
Social Darwinism, every man or woman for him or herself. It’s a tempting idea, because it doesn’t require much thought or ingenuity.“ Obama has rejected this free market vision
of government, preferring to see the power of the state as something that can serve the public interest. According to Obama, ”We’re going to put more money into education than we have. WE have to invest in human capital.“

Return to PayGo: compensate for all new spending

We were told by our President that we could fight two wars, increase our military budget by 74%, spend more on education, initiate a prescription drug plan, have tax cuts, all at the same time. We were told by Congress that they could make up for lost
revenue by cutting government waste.

The result is the most precarious budget situation we have seen in years. We now have an annual budget deficit of almost $300 billion, not counting more than $180 billion we borrow every year from the Social
Security Trust Fund.

It is not the debt that is most troubling. The bulk of the debt is a direct result of the President’s tax cuts, 47.4% of which went to the top 5% income bracket.

We can eliminate tax credits that have outlived their usefulness &
close loopholes that let corporations get away without paying taxes. We can restore a law that was in place during the Clinton presidency--called Paygo--that prohibits money from leaving the treasury without some way of compensating for the lost revenue.

Bush’s economic policies are not working

Obama believes that there is no such thing as a “jobless recovery.” When millions of Americans aren’t working, neither are the Bush Administration’s economic policies.
As US Senator, Obama will champion policies that get our economy moving and people working instead of short-sighted tax-cuts for the rich that have failed to spark a recovery.

Source: Campaign website, ObamaForIllinois.com
May 2, 2004

Supports federal programs to protect rural economy

Our rural communities are the backbone of Illinois. Yet, factories have closed, jobs have disappeared, and homes and farms have been foreclosed upon. Effective federal programs are necessary to protect the rural economy.

Barack Obama on Financial Bailout

US will emerge from this recession, stronger than before

For many Americans, the state of our economy is a concern that rises above all others. And rightly so. If you haven't been personally affected by this recession, you probably know someone who has. You don't need to hear another list of statistics to know
that our economy is in crisis, because you live it every day. The impact of this recession is real, and it is everywhere.

But while our economy may be weakened and our confidence shaken, though we are living through difficult and uncertain times,
tonight I want every American to know this: We will rebuild, we will recover, and the United States of America will emerge stronger than before.

The answers to our problems don't lie beyond our reach. They exist in our laboratories
and our universities; in our fields and our factories; in the imaginations of our entrepreneurs. What is required now is for this country to pull together, confront boldly the challenges we face, and take responsibility for our future once more.

Fundamentals were weak BEFORE crisis; focus on middle class

Q: Sen. McCain, to address the economic crisis, you proposed a $52 billion plan that includes new tax cuts on capital gains, tax breaks for seniors, write-offs for stock losses, among other things. Comments?

McCAIN: Americans are hurting right now, and
they’re angry. They’re innocent victims of greed and excess on Wall Street and as well as Washington, D.C. But we also have to have a short-term fix, in my view, and long- term fixes [as you outlined about my plan].

Q: Sen. Obama, you proposed
$60 billion in tax cuts for middle- income and lower-income people, more tax breaks to create jobs, new spending for public works projects to create jobs.

OBAMA: The fundamentals of the economy were weak even before this latest crisis. Sen.
McCain and I agree that we’ve got to help homeowners. I disagree with Sen. McCain in how to do it, because the way Sen. McCain has designed his plan, it could be a giveaway to banks if we’re buying full price for mortgages that now are worth a lot less.

Not enough to help those at the top: it doesn’t trickle down

Q: What’s the fastest solution to bail people out of economic ruin?

OBAMA: It’s not enough just to help those at the top. Prosperity is not just going to trickle down. We’ve got to help the middle class. Part of the problem is that for many of you,
wages and incomes have flat-lined. For many of you, it is getting harder and harder to save, harder and harder to retire. Sen. McCain is right that we’ve got to stabilize housing prices. But underlying that is loss of jobs and loss of income.
That’s something that the next treasury secretary is going to have to work on.

McCAIN: We obviously have to stop this spending spree that’s going on in Washington. Do you know that we’ve laid a $10 trillion debt on young Americans,
$500 billion of it we owe to China? We’ve got to have a package of reforms and it has got to lead to reform prosperity and peace in the world. And I think that this problem has become so severe, that we’re going to have to do something about home values.

I sought re-regulation; McCain boasts he’s a deregulator

McCAIN: Some of us stood up two years ago and said we’ve got to enact legislation to fix this. We’ve got to stop this greed and excess. Meanwhile, the Democrats in Congress defended what Fannie and Freddie were doing. They resisted any change.

OBAMA:
I’ve got to correct a little bit of Sen. McCain’s history. Let’s, first of all, understand that the biggest problem in this whole process was the deregulation of the financial system. Sen. McCain, as recently as March, bragged about the fact that he is a
deregulator. On the other hand, two years ago, I said that we’ve got a sub-prime lending crisis that has to be dealt with. I wrote to Secretary Paulson, I wrote to Federal Reserve Chairman Bernanke, and told them this is something we have to deal with,
and nobody did anything about it. A year ago, I went to Wall Street and said we’ve got to reregulate, and nothing happened. And Sen. McCain during that period said that we should keep on deregulating because that’s how the free enterprise system works.

We’re in the worst financial crisis since Great Depression

Q: Where do you stand on the financial recovery plan?

A: We are going through the worst financial crisis since the Great Depression. As we engage in this important rescue effort, we’ve got to make sure that we’ve got oversight over this whole process.
$700 billion, potentially, is a lot of money. We’ve got to make sure that taxpayers have the possibility of getting that money back--and gains--if & when the market returns. We’ve got to make sure none of that money is going to pad CEO bank accounts or t
promote golden parachutes. We’ve got to make sure we’re helping homeowners, because the root problem has to do with the foreclosures taking place all across the country. This is a final verdict on 8 years of failed economic policies--a theory that says w
can shred regulations & consumer protections and give more to the most, and somehow prosperity will trickle down. It hasn’t worked. The fundamentals of the economy have to be measured by whether or not the middle class is getting a fair shake.

The lax regulation that Bush favored got us in this disaster

Q: Do you favor this bailout plan?

A: We haven’t seen the language yet, & there’s constructive work being done. I am optimistic about the capacity of us to come together with a plan. But how did we get into this situation in the first place? Two years
ago, I warned that because of the subprime lending mess, because of lax regulation, that we were potentially going to have a problem & tried to stop some of the abuses in mortgages that were taking place at the time. Last year, I wrote to the secretary
of the Treasury to make sure that he understood the magnitude of this problem and to call on him to bring all the stakeholders together to try to deal with it. We’ve have to intervene to solve this problem short-term. But we’re also going to have to look
at how is it that we’ve shredded some many regulations, we did not set up a 21st century regulatory framework to deal with these problems. And that, in part, has to do with an economic philosophy that says regulation is always bad.

Pay attention to Main Street, not just Wall Street

OBAMA: Ten days ago McCain said the fundamentals of the economy are sound. Unless we are holding ourselves accountable day-in, day-out, not just when there’s a crisis for folks who have power and influence and can hire lobbyists but for the nurse, the
teacher, the police officer who frankly at the end of each month, they’ve got a little financial crisis going on. They’re having to take out extra debt just to make their mortgage payments. We haven’t been paying attention to them.

McCAIN: We’ve got
fundamental problems in the system. And Main Street is paying a penalty for the excesses and greed in Washington, DC, and in the Wall Street. There’s no doubt that we have a long way to go, and obviously stricter interpretation and consolidation of the
various regulatory agencies that weren’t doing their job that has brought on this crisis. But I have a fundamental belief in the goodness and strength of the American worker. And the American worker is the most productive, the most innovative.

Decide financial rescue plan on future slower tax revenues

Q: What are you going to have to give up, in terms of the priorities that you would bring as president, as a result of having to pay for the financial rescue plan?

A: There are a range of things that are probably going to have to be delayed. We don’t
yet know what our tax revenues are going to be. The economy is slowing down. So it’s hard to anticipate right now what the budget’s going to look like next year. But there’s no doubt that we’re not going to be able to do everything that needs to be done.

Source: 2008 first presidential debate, Obama vs. McCain
Sep 26, 2008

Spending freeze is like a hatchet where you need a scalpel

Q: In the middle of a huge financial crisis that is yet to be resolved, how this is going to affect you not in small ways, but in major ways, and the approach you would take to the presidency.

McCAIN: How about a spending freeze on everything but Defense, Veterans Affairs and entitlement programs? We ought to seriously consider, with the exceptions of caring for our veterans, national defense and several other vital issues.

OBAMA: The problem with a spending freeze is you’re using a hatchet where you need a scalpel. There are some programs that are very important that are currently underfunded. I want to increase early childhood education.
We’re currently spending $10 billion a month in Iraq when they have a $79 billion surplus. It seems to me that if we’re going to be strong at home as well as strong abroad, that we’ve got to look at bringing that war to a close.

Free market needs proper government oversight

"It's useful to remind ourselves that our free market system is the result neither of natural law nor of Divine Providence. Rather, it emerged through a painful process of trial and error. And although the benefits of our free market system are mostly
derived from the individual efforts of generations of men and women pursuing their own vision of happiness, in each and every period of great economic upheaval and transition we depended on government action to open up opportunity, encourage competition,
and make the market work better."

Obama's overall economic philosophy: He understands the power of the free market to create jobs and encourage creativity, but he also understands that, left to its own devices, without proper government oversight, it
has a way of bouncing wildly between booms and busts. Individual participants in a market economy can do little to influence the overall stability of the system, but government can, and must, act to assure our financial markets remain strong and stable.

Prosecute mortgager fraud; require full mortgage disclosure

Proposals Obama has made to address predatory lending and fraudulent activity in the mortgage and credit card business:

Protect homeownership and crack down on mortgage fraud: Obama will make sure homebuyers have honest and complete information
about their mortgage options.

Ensure more accountability in the subprime mortgage industry: Obama's STOP FRAUD Act provides the first federal definition of mortgage fraud, increases funding for federal and state law enforcement programs, creates new
criminal fraud penalties for mortgage professionals, and requires industry insiders to report suspicious activity.

Mandate accurate loan disclosure: Obama will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential
borrowers with a simplified, standardized borrower metric for home mortgages.

Close bankruptcy loophole for mortgage companies: Obama will eliminate the provision that prevents bankruptcy courts from modifying an individual's mortgage payment.

Latinos & blacks are hardest hit by housing & gas crises

For eight long years, Washington hasn’t been working for ordinary Americans. And few have been hit harder than Latinos and African Americans. You know what I’m talking about. Like a couple I met in Las Vegas who were tricked into buying a home they
couldn’t afford. You know about the families all across this country who are out of work, or uninsured, or struggling to pay rising costs for everything from a tank of gas to a bag of groceries. And that’s why you know that we need change in this country

Source: Obama & McCain back-to-back speeches at NALEO
Jun 28, 2008

More accountability in subprime mortgages

Ensure More Accountability in the Subprime Mortgage Industry:Obama introduced comprehensive legislation over a year ago to protect consumers against abusive lending practices. Obama’s STOP FRAUD Act provides the first federal definition of
mortgage fraud, increases funding for law enforcement, and creates new criminal penalties for mortgage fraud.

Create a Universal Mortgage Credit:Obama will create a 10% universal mortgage credit to provide tax relief to homeowners who do not
itemize. This credit will provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.

Mandate Accurate Loan Disclosure: Obama will create a Homeowner Obligation Made Explicit (HOME) score, which
will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages. The HOME score will allow individuals to easily compare various mortgage products and understand the full cost of the loan.

Help the homeowners actually living in their homes

It is important to make sure that we’re not helping out the speculators, but instead are helping out the homeowners who are actually living in their homes, who have the capacity to make the payments if they’re not seeing a huge increase in their mortgage
payments. But understand this, this is not new. We have a history in this country of preying on low-income peoples because they don’t have access to banks. The Community Reinvestment Act is oftentimes not enforced as it should be. We’ve got to open up
bank branches. We’ve got to give people access to financing so that they’re not going to a payday loan operation. I two years ago introduced a provision that would eliminate predatory lending, something that I had already helped to get passed at the
state level. We’ve got to give ordinary working people access to financing. Part of the reason that they are borrowing on their homes, they’re borrowing on credit cards, is that the banks and financial institutions have dominated policy in Washington.

Capping credit card interest rates at 30% is not enough

I thought 30 percent potentially was too high of a ceiling. So we had had no hearings on that bill. It had not gone through the Banking Committee. I don’t know about a lot of folks, if they’ve got a credit card, are paying 29 percent. So under this
provision, that would’ve been fine. There had been no discussion about how we were going to structure this and this was something that had not gone through the committee and we hadn’t talked about. It didn’t make sense for us to cap interest rates.

Accountability and oversight over the financial markets

The sub-prime lending mess, part of the reason it happened was because we had an administration that does not believe in any kind of oversight. You’ve got to disclose if you’ve got a teaser rate and suddenly their mortgage payments are going to
jack up & they can’t pay for them. I intend to restore a sense of accountability and regulatory oversight over the financial markets. We have the best financial markets in the world, but only if they are transparent and accountable and people trust them.

Source: 2008 Democratic debate in Las Vegas
Jan 15, 2008

Modify some of the fraudulent & predatory lending practices

We’ve got to modify some fraudulent & predatory lending practices. I put in a bill to make that happen because it does affect communities. Unless we are able to rid the influence of special interest lobbies, we’re going to continue to see bad
legislation like that. I’ve put forward a $10 billion housing fund that can help bridge people who have been responsible in making their payments. We’ve got to make sure they can get the kinds of help they need to stay in their homes & make the payments.

Source: 2008 Democratic debate in Las Vegas
Jan 15, 2008

Regulate financial instruments to protect home mortgages

Q: [to Dodd]: The Fed lowered the discount rate for banks to address the mortgage crisis. Should they lower rates for everyone else?

DODD: Yes, but we also need more liquidity in the market. It has seized up. You can’t get a mortgage in America today.

OBAMA: We do need more liquidity, but we’re going to have to not only help home owners who are going to be losing their homes as a consequence of this; we’re going to have to make sure that we’ve got the kinds of tough regulation when it comes to
financial instruments to make sure that people who have saved and are trying to get their own home for the first time are not hoodwinked out of it. And, unfortunately, the reason that we haven’t had tougher regulation in part goes back to the issue of
lobbying. This is where special interests have been driving the agenda. We have not had the kinds of consumer protections that are in place. That’s why, when we have this debate about lobbying, we have to remind ourselves it has very real consequences.

Government regulation needed for when markets fail

In the era of George Bush’s running up huge federal deficits, Obama advocated fiscal restraints, calling for pay-as-you-go government. He waxed on about the power of the free market to create wealth and change lives. But he also had an afterthought on a
market-based economy straight from liberal economist Paul Krugman: “Sometimes markets fail, and that’s when labor laws and government regulation are necessary correctives.” In other words, he was saying that capitalism is magnificent, but it does have
its drawbacks. It would be hard for anyone to argue with such a balanced statement. “Obama figures out ways to present himself like a conservative to conservatives.”
Said [one advisor]. “He has the whole venture capital industry here in Chicago, nothing but Republicans, thinking he is their champion. He has supported entrepreneurship. It is a pro-growth message.”

Barack Obama on Voting Record

Voted against limiting credit to 30%, because 30% too high

Clinton and Obama battled over their votes on bankruptcy bills and an amendment to cap interest charged on credit, at 30%. Obama claimed, “I thought 30% potentially was too high of a ceiling.”

Obama did vote against--and Clinton voted for--an amendment
that would have placed a 30% cap on the interest rate that could be charged on any extension of credit. The amendment failed by a vote of 74 to 24 in 2005. When the amendment came up for a vote, Obama was standing next to Sen. Paul Sarbanes,
D-MD, the senior Democrat on the banking committee and the leader of those opposing the landmark bill, which would make it harder for Americans to get rid of debt.

As for whether the 30% cap was too high, that’s certainly a matter of opinion.
Sen. Mark Dayton of Minnesota, sponsor of the amendment, said on the Senate floor that such a cap “is still consumer abuse” but is much better than rates of more than 300%, which he said were being charged by some loan operations in the country.

I opposed both the 2001 and 2005 bankruptcy bills

I opposed both the 2001 and 2005 bankruptcy bills. They were bad ideas, because they were pushed by the credit card companies, they were pushed by the mortgage companies, and they put the interests of those banks and financial institutions ahead
of the interests of the American people.

Source: 2008 Democratic debate in Las Vegas
Jan 15, 2008

Voted NO on paying down federal debt by rating programs' effectiveness.

Amendment intends to pay down the Federal debt and eliminate government waste by reducing spending on programs rated ineffective by the Program Assessment Rating Tool (PART).

Proponents recommend voting YES because:

My amendment says we are going to take about $18 billion as a strong signal from the Congress that we want to support effective programs and we want the taxpayer dollars spent in a responsible way. My amendment doesn't take all of the $88 billion for the programs found by PART, realizing there may be points in time when another program is not meeting its goals and needs more money. So that flexibility is allowed in this particular amendment. It doesn't target any specific program.
Almost worse than being rated ineffective, we have programs out there that have made absolutely no effort at all to measure their results. I believe these are the worst offenders. In the following years, I hope Congress will look at those programs to create accountability.

Opponents recommend voting NO because:

The effect of this amendment will simply be to cut domestic discretionary spending $18 billion. Understand the programs that have been identified in the PART program are results not proven. Here are programs affected: Border Patrol, Coast Guard search and rescue, high-intensity drug trafficking areas, LIHEAP, rural education, child abuse prevention, and treatment. If there is a problem in those programs, they ought to be fixed. We ought not to be cutting Border Patrol, Coast Guard search and rescue, high-intensity drug trafficking areas, LIHEAP, rural education, and the rest. I urge a "no" vote.

Voted NO on $40B in reduced federal overall spending.

Vote to pass a bill that reduces federal spending by $40 billion over five years by decreasing the amount of funds spent on Medicaid, Medicare, agriculture, employee pensions, conservation, and student loans. The bill also provides a down-payment toward hurricane recovery and reconstruction costs.

Get minorities into home ownership & global marketplace.

Obama adopted the CBC principles:

The CBC is focused on economic empowerment issues including:

New Markets and Small and Minority Business Development. The CBC will seek to increase opportunities for minority and small and disadvantaged businesses by expanding contracting opportunities in the public and private sectors, increasing access to capital, creating tax incentives for capital improvements, removing outdated and restrictive regulatory barriers, and streamlining and enhancing procurement tools to encourage minority and small business utilization.

Trade and Global Economic Empowerment.
The CBC will work to ensure that the benefits of the dynamic global marketplace extend to minority businesses, and Africa and developing countries. To this end, the CBC will propose and support trade and investment initiatives designed to bridge the global digital divide, create jobs, improve infrastructure, promote sustainable development, and raise living and work standards for people of color around the globe. Moreover, the CBC will work to ensure that America’s international trade agenda and priorities also meet these goals.

Increasing Affordable Housing Opportunities. The CBC’s goal is to increase the nation’s homeownership rates. Home ownership is one of the best wealth creation vehicles for minority families. We will work with lending institutions and community organizations to ensure that minorities are afforded every opportunity to realize the dream of owning a home.

Require full disclosure about subprime mortgages.

Obama co-sponsored requiring full disclosure about subprime mortgages

Sen. DODD: Today we are facing a crisis in the mortgage markets on a scale that has not been seen since the Great Depression: over 2 million homeowners face foreclosure at a loss of over $160 billion in hard-earned home equity; over one out of every 5 subprime loans is currently delinquent. These high default rates have frozen the subprime and jumbo mortgage markets and infected the capital markets to the point where central banks around the world have had to inject liquidity into the system to avoid the crisis from spreading to other segments of the market.

One of the fundamental causes of this serious crisis is abusive and predatory subprime mortgage lending. The Homeownership Preservation and Protection Act of 2007 is designed to protect American homeowners from these practices, and prevent this disaster from happening again. The legislation will:

realign the interests of the mortgage industry with borrowers to insure the availability of mortgage capital on fair terms
both for the creation and sustainability of homeownership;

establish new lending standards to ensure that loans are affordable and fair, and

provide for adequate remedies to make sure the standards are met; and create a transparent set of rules for the mortgage industry so that capital can safely return to the market without bad lending practices driving out the good.

It is important to keep in mind that only about 10% of subprime mortgages have been made to first time home buyers. This market has not been primarily about creating a new set of homeowners; a majority of subprime loans have been refinances. While maintaining access to subprime credit on fair terms is important, too much of the subprime market has actually put the homes and home equity of American families at risk.

In the coming months, the housing crisis is going to get worse. We will need to continue to press lenders and servicers to provide real relief for homeowners threatened with foreclosure.

Reform mortgage rules to prevent foreclosure & bankruptcy.

Makes FY2008 appropriations for emergency needs of states and local governments to redevelop abandoned and foreclosed homes; and the Neighborhood Reinvestment Corporation for foreclosure mitigation activities.

Helping Families Save Their Homes in Bankruptcy Act of 2008 - Authorizes a bankruptcy plan for individuals with regular income to provide for payment of such claim for a period of up to 30 years. Creates a principal residence homestead exemption for debtors over 55 years of age.

Mortgage Disclosure Improvement Act of 2008 - Amends the Truth in Lending Act to set forth additional disclosure requirements governing any extensions of credit (not only mortgages) secured by the dwelling of a consumer.